Avolta Ag · SIX:AVOL
Avolta — Dufry — Investor Day (September 2022)
109 slides from Avolta's investor day presentation, Sep 6, 2022
Slide 1: Capital Markets Day 2022
Capital Markets Day 2022 6th September 2022, London 1
Slide 2: Legal Disclaimer
Legal Disclaimer The proposed transaction between Dufry, Autogrill and Edizione is subject to merger control and other regulatory approvals. Any statements relating to Dufry and Autogrill as a combined entity are subject to the transaction receiving those regulatory approvals, and completion of the
Slide 3: We crafted our new strategy based on a deep understanding of stakeholders
We crafted our new strategy based on a deep understanding of our stakeholders and the evolving market trends Where do we stand today What comes next Facts & Insights DESTINATION 2027 Analyzed consumer & traveler trends We will bring our We developed our 5-year strategy to life Talked to employees, s
Slide 4: Your detailed program over the next two days
Your detailed program over the next two days 6th September, The Londoner 7th of September, Heathrow 10:45 - 11:30am Door opening, coffee & snacks, and engagement at venue Group 1: Heathrow Terminal 5 visit 8:45 – 10:30am Tour of Terminal 5 11:30 - 1:00pm Management presentation (Part 1) • Chairman o
Slide 5: Agenda
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification MAKING Operational Improvement Culture TRAVELERS ESG DESTINATION 2027 HAPPIER Financials Conclusion Q&A 5
Slide 6: Agenda
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 6
Slide 7: Agenda: Addressable Market Evolution
Agenda Focus Market and Traveler Insights Addressable Market Evolution Travel Experience Revolution • Large addressable market Geographical Diversification • Healthy fundamentals Operational Improvement Culture • Resilient customer target segment ESG DESTINATION 2027 • Strong recovery, at different
Slide 8: We serve a large Travel Retail market, expanding further with Travel F&B
LARGE ADDRESSABLE MARKET We serve a large Travel Retail market, expanding further with Travel Food & Beverage • Airports • Motorways • Downtown • Trains • Cruises and • Airlines & Ferries Others Note: Global Travel Retail market excl. roads and railway; F&B defined as F&B concession market at airpor
Slide 9: Air Traffic market has proven resilient to different shocks
HEALTHY FUNDAMENTALS Air Traffic market has proven resilient to different shocks Relative number of airline passengers' growth PAX and flights Worldwide number of airline passengers1 (1990-2019, indexed to 1990) world population Dot.com Global estimated to have 9/11 SARS Financial Crisis 10-20% take
Slide 10: Global traveler volume will return to pre-COVID levels by 2024
HEALTHY FUNDAMENTALS Global traveler volume will return to pre-COVID levels by 2024, with different speed by geography Air traffic total Air traffic by region Air traffic - origin & destination # of departing PAX (B PAX, airport only) 3.7% Growth beyond 2019 levels Source: Travel Retail Model by lea
Slide 11: Airline PAX continue to be an attractive segment
RESILIENT CUSTOMER SEGMENT Airline PAX continue to be an attractive segment as number of trips per person grows with GDP per capita I N D I C A T I V E Singapore Ireland Luxembourg Number of travel trips APAC (excl. CN) increases with GDP China growth per country Europe North America Central & South
Slide 12: Airport Travel Retail market to reach pre-COVID levels by 2024/25
STRONG RECOVERY Airport Travel Retail market to reach pre-COVID levels by 2024/25 Total Travel retail spend (B $, airport only) Total Travel Retail spend per region (B $, airport only) Growth beyond 2019 levels •~ APAC (excl. CN) China Europe North America Note: Market size based on real GDP growth
Slide 13: Agenda: Consumer & Traveler Insights
Agenda Focus Market and Traveler Insights Addressable Market Evolution Travel Experience Revolution Consumer & Traveler Insights Geographical Diversification • Consumers are changing Operational Improvement Culture • Travel is changing ESG • New travel “personas” emerge demanding new DESTINATION 202
Slide 14: Consumer and traveler mix is changing
CONSUMERS ARE CHANGING Consumer and traveler mix is changing, driving different and new behaviors 2019 2025 Generation Y and Z1 ~40% >70% Sales directly influenced by online >10% >30% Share of Chinese luxury shopping within China >33% >50% Note: 1) Quantified based on luxury goods shopper profiles;
Slide 15: People spend more time on personal devices
CONSUMERS ARE CHANGING People spend more time on personal devices, especially for using the internet and social media Time on mobile devices increased to ~4h / day 7+h / day spent on internet and social media Listening to music 1 Using social media 2 Watching TV & 4 streaming Using internet 5 Source
Slide 16: Willingness to go back to experiences is at an all-time high
CONSUMERS ARE CHANGING Consumers overindulged on products, but the willingness to go back to experiences is at an all-time high Global Luxury markets (Index = 2010 | 2010-2025) Experience-based goods Experience-based goods almost fully recovering to 2019 levels, favored by positive consumer * tracti
Slide 17: Consumer expectations on F&B are evolving
CONSUMERS ARE CHANGING Consumer expectations on F&B are evolving Better for me Better for Enhanced the world transparency Seek for food that suits Consciousness about Demand for transparency personal lifestyle (e.g., impact on environment in sourcing of ingredients vegetarian, paleo, whole leading t
Slide 18: Personalization, convenience & experience increasingly important
CONSUMERS ARE CHANGING Personalization, convenience & experience increasingly important for both F&B and Retail customers Next-gen personalization Disruption to store experience Use of new technology to personalize consumer experiences Opportunities to redefine store experiences Personalized experie
Slide 19: Emerging consumer interest for wellbeing / eco products
CONSUMERS ARE CHANGING Emerging consumer interest for wellbeing / eco products Especially local products and souvenirs are interesting Which products from the wellbeing and sustainable for airport shoppers category would you most like to buy in this shop?1 Emerging trend to buy Wellbeing and Sustain
Slide 20: Traffic patterns and preferences are evolving
TRAVEL IS CHANGING Traffic patterns and preferences are evolving Long-haul traffic recovery starting later but quicker LCC traffic growing more than total LCC capacity share evolution (worldwide) Domestic International short-haul (SH) International long-haul (LH) LCC seats Non LCC seats Source: Trav
Slide 21: Leisure travel spend is recovering faster
TRAVEL IS CHANGING Leisure travel spend is recovering faster Business and leisure travel spend (B $) Leisure travel • Pent-up leisure demand drives rapid travel recovery • Customers use "long-term savings" to spend for missed trips • Domestic / regional travel remains popular due to lower uncertaint
Slide 22: The Airport of the Future will have more predictable dwell time
TRAVEL IS CHANGING Despite current disruptions, the “Airport of the Future” will have more predictable dwell time From operational disruption & staffing challenges … to seamless airport of the future in a few years driven by accelerating pax return today… from now with evolving airport operations Se
Slide 23: Old traveler segments have limited value to predict preference
NEW PERSONAS EMERGE Old traveler segments have limited value to predict preference and behavior New travel personas identified Traditional segments based on travel needs and demographics through social media listening Researchers Independent Premium Budget Group Habitual • Analysis of 15m travel-rel
Slide 24: Social media research identified trending topics
NEW PERSONAS EMERGE Our social media research identified trending topics like brain boosters in F&B, sensory retail experience, regenerative consumption EXAMPLES Trending There’s a continual pursuit for After a long period of restrictions, The travel industry is moving on to topics effective brain b
Slide 25: Three new travel personas emerge from market research
NEW PERSONAS EMERGE Three new travel “personas” with different behaviors and needs emerge from market research – future evolution to be observed Working Wanderers Experience Seekers Young Explorers Remote schooling and work are Curated travel deals are catching the Tech-savvy, disruptive young trave
Slide 26: How do we address new personas and drive our business results
WAY FORWARD How do we address new personas and drive our business results Consumers are changing × Travel is changing New TRAVELERS (personas) REVENUES × Spend per passenger (SPP) Passenger Volume (PAX) Spend per ticket × Conversion Individual Traveler mix Dwell time Macroeconomics Relative traveler
Slide 27: Traveler and market insights used to develop Destination 2027
WAY FORWARD Traveler and market insights used to develop our new strategy “DESTINATION 2027” and enable sustainable profitability Consumer and Traveler Insights Younger travelers seeking for more experience, DESTINATION 2027 convenience and wellness Revolutionize travel experience Feedback from Dufr
Slide 28: Agenda: Destination 2027
Agenda DESTINATION 2027 Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 28
Slide 29: Destination 2027 pillars
Agenda DESTINATION 2027 Market and Traveler Insights I Travel Experience Revolution Travel Experience Revolution Holistic Travel Experience Reimagined Travel Retail Food and Beverage Geographical Diversification Traveler Operational Improvement Culture Digital Point of Sale End-to-End Engagement ESG
Slide 30: Destination 2027 will have impact on our performance indicators
Destination 2027 will have impact on our most important performance indicators Accelerate revenue growth Sustainable Improved Passenger Spend per passenger (SPP) profitability risk profile volume Conversion Spend/ticket Reimagined Travel Retail Food and Beverage Digital Sustainable Point of Sale Cas
Slide 31: Agenda
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 31
Slide 32: Agenda: Travel Experience Revolution focus
Agenda Focus Market and Traveler Insights • We continue to adapt our value proposition Travel Experience Revolution • We redesign our space dynamically to Geographical Diversification customize the experience Operational Improvement Culture • We evolve our offering dynamically based on data and cons
Slide 33: We customize our value proposition based on traveler profile and needs
We customize our value proposition based on traveler profile and needs Retail Data driven and F&B & customized offering & store experience pricing Brands Dufry value proposition Traveler Digital Sales engagement Force Landlords 33
Slide 34: Re-imagined value proposition with Airport and Brand partners
VALUE PROPOSITION Re-imagined We work together with our Airport and Brand value proposition partners to deliver value to travelers Airports Brands • Space • Quality of the • Product innovation • Pre & post journey experience engagement • Data • Consumer • … engagement • … • Opportunity for hybrid co
Slide 35: Making Travel Experience holistic by including Food & Beverage
VALUE PROPOSITION Travel Retail and Making Travel Experience holistic by including F&B experience Food & Beverage F&B is the key enabler to transition to a holistic Travel Experience... Value for stakeholders Physical and digital Cross-selling cross-selling promotions opportunities in overlap termin
Slide 36: Partnering with airports for space management
STORE EXPERIENCE Data driven flow and Partnering with airports for space management space management according to traveler flows Space allocation (example) Core Potential performance by store type Airport/ Terminal - specific traveler mix, behaviors & Analyticall preferences Departures engine Airpor
Slide 37: Stores customized for traveler mix
STORE EXPERIENCE Stores customized Analysis of store & customer data allows to for traveler mix create modular store components / “bricks” Customized Stores Analyticall engine 1 Standardization: 2 Flexibility: 3 Materiality: Mix of existing “Bricks” allocation can be Customization only where standar
Slide 38: Technology exists to constantly monitor store performance
STORE EXPERIENCE Self-learning Technology exists to constantly monitor smart store detailed store performance Cameras Travelers mapping w / unique ID Insights on store performance • Identify hot / cold areas or shelves that are not interesting / engaging • Identify shelves with high browsing but low
Slide 39: Dynamic range management opens opportunities in existing categories
DATA-DRIVEN OFFERING Dynamic assortment Dynamic range management opens and pricing opportunities in existing categories Examples Beauty Indie brands, clean beauty, grooming, … Tobacco Vaping, heat-not-burn, … Dynamic range Liquor NoLo, Limited Editions, Super Premium, … management Food Health & Well
Slide 40: Opportunities complemented by concept innovation
DATA-DRIVEN OFFERING Opportunities in existing categories are Concept Innovation complemented by concept innovation EXAMPLES Private label “Around the World” Successfully launched: • Souvenirs and food destination products, with focus on airports with – Confectionery in leisure PAX Canada – Souvenir
Slide 41: Customer service levels tailored to store concept
SALES FORCE Sales force, customized Customer service levels tailored to store concept, service level delivery geography, PAX mix, and retail added value 1 2 Store Clusters Tailored customer service Store concept/ level options: Geography categories • Sales staff per sqm / PAX differentiated by categ
Slide 42: Three main goals for our consumer-facing digital
DIGITAL Digital engagement of Three main goals for our consumer-facing digital (non-) customers 1 2 3 Further engage with frequent Excel in sales influenced by Transform the shopping travelers and establish deeper connections digital along the traveler journey experience in-store CRM, personalizatio
Slide 43: Example: Digital traveler journey in the airport
DIGITAL Digital engagement pre-, Example: Digital traveler journey in the airport post- and in-store Tackling Clienteling Converting Report Store store Store Associate Ask about Process a Collaborate Notification to Action Associate incident gets up today shift product with oher go to POS and reques
Slide 44: Example: Store experience linked to pre- and post-store journey
DIGITAL Digital engagement pre-, Example: Store experience linked to pre- and post- and in-store post-store traveler journey Social • Notify what’s new 68% of consumers expect online in store: pop-up experiences to be linked to offline media events, promotions, marketing contests • Live tweets, vide
Slide 45: We promote our Brands throughout the passenger journey
DIGITAL Digital engagement We promote our Brands throughout the for brands passenger journey EXAMPLES Before departure In-store Post-trip Web impression in In our store, Reports created with collaboration with Adara campaign is played data / customer and other partners to on screens creating behavio
Slide 46: Agenda: How it creates value
Agenda How it creates value Market and Traveler Insights 1• Grow revenues by driving SPP increase through Travel Experience Revolution better conversion and increased spend per ticket Geographical Diversification 2• Engage with airports in a way that can mitigate Operational Improvement Culture the
Slide 47: Agenda: What is going to change
Agenda What is going to change Market and Traveler Insights 1• 50%+ of our stores to be smart stores by 2025 Travel Experience Revolution Geographical Diversification 2• 50% of our customers with digital engagement by 2025 Operational Improvement Culture 3• New loyalty program deployed through 100%
Slide 48: Agenda
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 48
Slide 49: Agenda: Geographical Diversification focus
Agenda Focus Market and Traveler Insights • Develop North America’s footprint Travel Experience Revolution • Top Asia Pacific countries and Chinese Geographical Diversification travelers Operational Improvement Culture • Foster and grow strong positions in Rest of the World ESG DESTINATION 2027 • Co
Slide 50: North America: large, resilient market
NORTH AMERICA Large, resilient market with strategically good positioning to grow for the combined company 50
Slide 51: Autogrill integration strengthens footprint in US and Canada
NORTH AMERICA Autogrill integration will lead to strengthened footprint in US and Canada Combined presence in ~100 airports in US and Canada Dufry Autogrill Combined presence Source: Dufry data; Autogrill data 51
Slide 52: Strategic focus on a selection of important APAC markets
ASIA PACIFIC AND CHINESE Strategic focus on a selection of important APAC markets 10 biggest countries in APAC by PAX (2019) China 1,387 M* • Total APAC TR market South Korea 157 M* ~46 B $ and 3.2 B PAX in Japan India 264 M* 2019 335 M* Taiwan 72 M* Thailand Vietnam 91 M* • 10 biggest countries / 1
Slide 53: Chinese nationality represents a large part of APAC PAX
ASIA PACIFIC AND CHINESE Chinese nationality represents a large part of APAC PAX, with strong growth especially in domestic Chinese PAX in APAC Chinese PAX development Note: PAX growth rate for 2027 same as for 2026; Departing PAX; Source: Travel Retail Model by leading external party; Generation Re
Slide 54: Key destinations for Chinese outside China
ASIA PACIFIC AND CHINESE Key destinations for Chinese outside China are Thailand, Japan, and South Korea Destinations of Chinese PAX outside China (2019) • APAC accounts for ~80% of Chinese travelers' destinations in 2019 • Presence in key APAC destinations critical to capture Chinese travelers’ spe
Slide 55: Hainan continues to be fastest growing duty-free location
ASIA PACIFIC AND CHINESE Hainan continues to be fastest growing duty-free location CAGR Mainland China personal luxury sales (B $) 18-21 42% Total duty-free store sales were about 9 B $ in 2021, about 8 B $ from duty-free sales Personal luxury comprises ~95% 38% of Hainan duty-free store sales Luxur
Slide 56: Partnership with Alibaba to develop Travel Retail in China
ASIA PACIFIC AND CHINESE Partnership with Alibaba to develop Travel Retail in China and to drive online engagement globally 1 Pre-order & buy before trip Partnership with Alibaba since Push with hotel, air & November 2020, including equity stake train tickets, or tour by Alibaba bookings Proacti
Slide 57: Continue to defend and grow established positions in Rest of the World
REST OF THE WORLD Continue to defend and grow our established positions, also including Autogrill’s footprint Europe & ME with large scale; Central & South Dufry well positioned in Europe & ME and Central America and Africa with PAX growth & South America with ~30+% market share Source: Travel Retai
Slide 58: Agenda: How it creates value
Agenda How it creates value Market and Traveler Insights 1• Improved risk profile diversifying for local / Travel Experience Revolution regional economic cycles and shocks Geographical Diversification 2• Accelerated passenger growth by serving fast- growing geographies Operational Improvement Cultur
Slide 59: Agenda: What is going to change
Agenda What is going to change Market and Traveler Insights 1• Combined Dufry-Autogrill team in North Travel Experience Revolution America Geographical Diversification 2• New enhanced and dedicated APAC team Operational Improvement Culture 3• New business development approach with defined priorities
Slide 60: Agenda
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 60
Slide 61: Agenda: Operational Improvement Culture focus
Agenda Focus Market and Traveler Insights • Operational improvement culture Travel Experience Revolution • Zero-Based Budgeting Geographical Diversification • Active portfolio management Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 61
Slide 62: Establish an Operational Improvement Culture
Establish an Operational Improvement Culture to fuel growth, profitability and cash flow generation Identify operational savings Impact Grow P&L FUEL FUEL Operational PROFITABILITY Improve Innovate GROWTH Improvement and CASH FLOW capabilities Culture GENERATION Drive Reinvest efficiency Actively ma
Slide 63: Leveraging ZBB methodology for operational improvement
ZBB We are leveraging ZBB methodology to ensure constant operational improvement Leading trends driving a cost reset 1 Simplicity Eliminate unnecessary complexity in offerings, structures, and Keep only what is processes to focus on highest value areas critical and necessary to run the business 2 Au
Slide 64: Active portfolio management to increase profitability
ACTIVE PORTFOLIO MANAGEMENT Active portfolio management to increase profitability and focus efforts on right targets Key principles On-going activities • Full profitability evaluation for each concession • On-going evaluations and discussions with some contract (including allocation of country G&A1,
Slide 65: Agenda: How it creates value
Agenda How it creates value Market and Traveler Insights 1• Sustain margins Travel Experience Revolution 2• Reinvest in business Geographical Diversification 3• Share with Airport partners making Operational Improvement Culture concession fees competitive ESG DESTINATION 2027 Financials Conclusion Q
Slide 66: Agenda: What is going to change
Agenda What is going to change Market and Traveler Insights Travel Experience Revolution 1• Zero-based budgeting discipline for budget 2023 Geographical Diversification 2• Dedicated integration team focused on synergy delivery Operational Improvement Culture ESG 3• Active management of concession po
Slide 67: Agenda
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 67
Slide 68: Agenda: ESG focus
Agenda Focus Market and Traveler Insights • Comprehensive ESG strategy focused Travel Experience Revolution on four areas Geographical Diversification • Science-Based Targets (SBTi) in place Operational Improvement Culture • Broad portfolio of local projects with real impact ESG DESTINATION 2027 Fin
Slide 69: ESG strategy is structured along focus areas
ESG STRATEGY Dufry’s ESG strategy is structured along 4 focus areas • Product sustainability & • Employee retention safety • Diversity & Inclusion • Customer service & safety CUSTOMER EMPLOYEE FOCUS EXPERIENCE TRUSTED PROTECTING PARTNER ENVIRONMENT • Corporate & sustainability • Emissions and govern
Slide 70: Science Based Target initiative emission reduction targets
SCIENCE BASED TARGET Science Based Target initiative (SBTi) emission reduction targets released Scope 1 & 2 emissions1 Reduce electricity emissions and use “Green Energy” Achieve Climate Reduce and compensate Neutrality by 2025 approx. 40,000t CO2 Compensate residual amount ` of “non-avoidable emiss
Slide 71: Local projects: 420 locations in 66 countries
LOCAL PROJECTS Positive impact on society by being a good employer and supporting local projects – make it tangible and visible Mind – for better mental health United Kingdom Education Charity Water; Scholarship Fundación Aladina; RgZ Foundation Program; Switzerland Make-A-Wish Communities In Greece
Slide 72: Agenda: Destination 2027
Agenda DESTINATION 2027 Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 72
Slide 73: Expectations reflected in Destination 2027 strategy
Evolving consumer / traveler, airport and brand expectations have been reflected in our Destination 2027 strategy Consumers change DESTINATION 2027 Traveler Travel change Revenues = PAX + SPP I Travel Experience Revolution (Conversion + SPT) Holistic Travel Experience Reimagined Travel Retail Food a
Slide 74: Destination 2027 will have impact on our performance indicators
Destination 2027 will have impact on our most important performance indicators Accelerate revenue growth Sustainable Improved Passenger Spend per passenger (SPP) profitability risk profile volume Conversion Spend/ticket Reimagined Travel Retail Food and Beverage Digital Sustainable Point of Sale Cas
Slide 75: Agenda
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 75
Slide 76: Agenda: Financials focus
Agenda Market and Traveler Insights • Shareholder value creation through delivering: Travel Experience Revolution – Long-term top-line growth – Sustainable profits Geographical Diversification – Strong risk-adjusted cash flow generation Operational Improvement Culture • Increasing clarity through: –
Slide 77: Destination 2027 Strengthens Dufry's Investment Case
DESTINATION 2027 Strengthens Dufry’s Investment Case • Underlying passenger growth Long-term • Spend per Passenger increase, driven by Travel Experience Revolution 1 top-line growth • Business Development through diversification and hybrid concepts • Selected acquisitions / industry consolidation •
Slide 78: Destination 2027 Addresses Potential Challenges
DESTINATION 2027 Addresses Potential Challenges Outlook impacted by external factors Geopolitical Instability Currency • Geopolitical, COVID19/health, economical Regulatory Volatility & Inflation environment and consumer sentiment impact business Travel • Passenger mix of particular importance Conce
Slide 79: Levers for Dufry's top line growth
1 Long Term Top Line Growth Levers for Dufry’s top line growth Sales Lever Impacting Factors Growth Contribution Government Passengers GDP per Capita Restrictions Traveler profile Traveler mix Spend per evolution Passenger Macroeconomics & Dwell time & offering FX impacts Differentiated Brand and La
Slide 80: Variable cost base creates a flexible business model
2 Sustainable Profits Dufry’s variable cost base creates a flexible business model % of Turnover 0 100 % of Turnover 2019 COGS • COGS are by nature entirely variable 40 • Concession fees: Significant part of concession fees are Concession variable in nature with proportion of MAGs per PAX having Fee
Slide 81: Case Study Pandemic Years - Flexible Cost Structure
2 Sustainable Profits Case Study Pandemic Years - Flexible Cost Structure MAG WAIVER PEX OPEX* CAPEX +1,078 -608 -234 -157 • Dufry’s business model has confirmed its resilience even under extreme situations like the pandemic • Rigorous liquidity and cash management and dedicated actions across the g
Slide 82: Different concepts with different cost structure
2 Sustainable Profits Different concepts with different cost structure ILLUSTRATIVE Duty Free/Paid Convenience F&B Inflation Impact Gross Profit Margin 59% 65% 70% Marginal Reflected in sales, Concession Fees -32% -21% -16% MAG adjusted Personnel Expenses -12% -25% -32% Relevant Other Expenses -6% -
Slide 83: Strong risk-adjusted Cash Flow of Combined Business
3 Strong risk-adjusted Cash Flow of Combined Business Concepts with differences in cash flow profile ILLUSTRATIVE Trade Net Working Capital (TNWC)* % of Turnover* • Travel Retail (Duty-free & Duty-paid and 11.0% Convenience) requires more investments in trade 8.0% 9.0% net working capital compared t
Slide 84: CAPEX and average contract duration by concept
3 Strong risk-adjusted Cash Flow of Combined Business Concepts with differences in cash flow profile ILLUSTRATIVE CAPEX Average Contract Duration % on Turnover Years 10 -6% to 5-6% -10% 4-5% 5 2-3% 2-3% 0 DF&DP * Convenience F&B DF&DP * Convenience F&B Dufry’s historical CAPEX ratio between 2.8-3.
Slide 85: Cash Flow Conversion
3 Strong risk-adjusted Cash Flow of Combined Business Cash Flow Conversion Cash Flow before Financing Conversion Equity Free Cash Flow Conversion CHF million, Conversion in % CHF million, Conversion in % 1.700 1.700 1.200 1.200 700 38.5% 40.3% 27.1% 700 27.3% 200 200 2018 2019 2018 2019 -300 -300 EB
Slide 86: Diversification strategy of combined business
4 Resilient Business Diversification strategy of combined business (sales profile as of 2019)* Geography Combined Format Combined Channel Combined Motorways 9% RoW ** 25% F&B Other *** 35% Duty Free 10% 39% Europe 43% Airports 81% North America Duty Paid 32% 26% Source: Company information Note: His
Slide 87: Stable Shareholder Base & Well-balanced Governance
4 Resilient Business Stable Shareholder Base & Well-balanced Governance Shareholder Base* Governance Richemont; >5.0% • Strong commitment to Swiss Code of Best Practice for Corporate Governance Alibaba; 7.7% Qatar; 8.0% • Commitment to Board Independence & Diversity while securing necessary skill se
Slide 88: Strong Relationships with Stakeholders
4 Resilient Business: Strong Relationships with Stakeholders Stakeholder support particulary visible during health crisis CONCESSION PARTNERS INVESTORS Agreeing to minimum annual guarantee (“MAG”) Total capital raised through equity-linked reliefs in the total amount of approx. CHF 2 billion investo
Slide 89: Solid Financing Strategy
4 Resilient Business Solid Financing Strategy Net Debt Evolution Covenant Evolution CHF million Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 22 22 22 22 22 22 22 22 22 22 22 23 23 23 23 23 23 23 23 23 23 23 23 Actual Covenant holiday Covenant • Net debt
Slide 90: High Visibility on Financing Costs
4 Resilient Business High Visibility on Financing Costs Debt by Product (CHF million)* Fixed Floating Rate Mix Evolution** 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Well-balanced debt profile • Access to different financing products • Product mix geared towards fixed rate products with high
Slide 91: Well-balanced Maturity & Interest Profile
4 Resilient Business Well-balanced Maturity & Interest Profile EUR 800m Bond 2024 2.5% USD 550m Loan 2024 3.7% Average Interest Rate of 2.95% EUR 1,300m RCF 2024 variable CHF 86m Covid Govtl. Loans 2024 variable CHF 111m Covid Government Loans, maturing after 2024 variable • Mainly fixed CHF 500m Co
Slide 92: Shareholder Value & Capital Allocation Strategy
5 Shareholder Value & Capital Allocation Strategy Target Leverage of Sustainable Free Cash Flow Generation below 3x Net Debt/Adj. Oper. Cash Flow (allow to temporarily increase for strategic M&A) Capital allocation securing financial flexibility Accelerate company Considering return cash to Support
Slide 93: Mid-term Outlook Combined Business
5 Mid-term Outlook Combined Business (All Values in CHF, constant FX) 2023 – 2024 p.a. (Transition) 2025 – 2027 p.a. (base 2024) PAX • Regional passenger evolution 3.5% to 4.0% Turnover 7.0% to 10.0% SPP • Unaffected, with normalized inflation 1.5% to 2.0% CAGR ~5% to 7% • New opportunities Business
Slide 94: Agenda
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification Operational Improvement Culture ESG DESTINATION 2027 Financials Conclusion Q&A 94
Slide 95: Conclusion (1/2): Large and healthy addressable market
Conclusion (1/2) Large and healthy Changing Changing addressable market Consumer Travel • Travel Retail & F&B is a large market (115 B$) • PAX mix changes • Traffic patterns and preferences are • Air Traffic is historically resilient • More time is spent on evolving personal devices • PAX volumes ex
Slide 96: Conclusion (2/2): Destination 2027
Conclusion (2/2) DESTINATION 2027 2024-2027 I Travel Experience Revolution • Sales growth: Holistic Travel Experience Passengers Reimagined Travel Retail Food and Beverage + SPP + New Concessions Traveler + M&A Digital Point of Sale • Improved margins End-to-End Engagement (% CORE EBITDA) ESG • Focu
Slide 97: Making Travelers Happier
Agenda Market and Traveler Insights Travel Experience Revolution Geographical Diversification MAKING Operational Improvement Culture TRAVELERS ESG DESTINATION 2027 HAPPIER Financials Conclusion Q&A 97
Slide 98: Annex
ANNEX 98
Slide 99: New Financial Reporting CORE P&L
New Financial Reporting CORE P&L • IFRS 16 added significant complexity to Dufry’s financial reporting CORE Introduction of CORE P&L providing meaningful • IFRS EBITDA and EBIT approach provides no longer meaningful KPIs for Dufry’s performance performance metrics CORE based on IFRS except for • P&L
Slide 100: Details to the Concession Line
Details to the Concession Line P&L Charges in different concepts Pre-IFRS 16 IFRS 16 CORE (until 2018) (as of 2019) (as of 2022) Concession Fee > Lease Expenses < Concession Fee (as part of Selling Expenses) EBITDA < EBITDA > EBITDA Right of Use Depreciation Lease Interest • Concessions part of oper
Slide 101: CORE Reporting – Bridge to IFRS
CORE Reporting – Bridge to IFRS Acquisition IFRS related CORE CORE CHF million 6M 2022 Adjustments Adjustments 6M 2022 Turnover 2’923 2’923 Acquisition related Adjustments Cost of sales -1’144 -1’144 Gross profit 1’779 1’779 • D&A: Excluding CHF 80m amortization in Concession Expenses -408 -450 -858
Slide 102: CORE Reporting – Historical P&L 2016 - 2021
CORE Reporting – Historical P&L 2016 - 2021 CHF million 2016 2017 2018 2019 2020 2021 Turnover 7’829 100% 8’377 100% 8’685 100% 8’849 100% 2’561 100% 3’915 100% Cost of sales -3’245 -41% -3’399 -41% -3’489 -40% -3’525 -40% -1’184 -46% -1’704 -44% Gross profit 4’584 59% 4’979 59% 5’196 60% 5’323 60%
Slide 103: CORE Reporting vs pre IFRS16 Reporting Example 2018
CORE Reporting vs pre IFRS16 Reporting Example 2018 Acquisiton related Lineari- CHF million IAS 17 Reclass Expenses zation CORE Reclasses Turnover 8,685 8,685 • Presenting concession fees separately Gross Profit 5,196 5,196 Selling Expenses/ from other selling expenses -2,581 116 -2,465 Concession E
Slide 104: Reconciliation CORE EBITDA to Adjusted Operating Cash Flow
Reconcilation CORE EBITDA to Adjusted Operating Cash Flow • Pre-IFRS 16 EBITDA, CORE EBITDA and Adjusted Operating Cash Flow are highly correlated • Deviation mainly due to MAG cash flow timing shifts and MAG reliefs during pandemic • Deviation to former pre-IFRS16 reported EBITDA (2016-2018) solely
Slide 105: Cash Flow Structure under CORE
Cash Flow Structure under CORE CHF million June 2022 June 2021 June 2019 CORE EBITDA 227 -4 354 • CORE has no impact on cash flow Other non-cash items* 23 -43 55 Changes in net working capital 89 -121 -17 • Cash Flow to start with CORE Capital expenditures -47 -34 -125 EBITDA Cash flow related to mi
Slide 106: 2019 excluding one-offs
2019 excluding one-offs Base year 2019 adjusted for non-recurring items 2019 excluding Dufry (CHF million) 2019 One-off Comment one-offs Turnover 8’849 - 8’849 Gross Profit 5’323 - 5’323 Concession Fees -2’655 - -2’655 Personnel Expenses -1’243 - -1’243 Other Expenses -541 -64 Brazil tax refund 1 -6
Slide 107: Pro-forma Combined Financials w/o Synergies
Pro-forma Combined Financials w/o Synergies Proforma estimate Dufry stand-alone Impact in combined ratio 2019 (CHF million) based on CHF 14bn • The P&L and excl. one-offs vs. Dufry stand-alone combined Turnover Cash Flow of Turnover 8’849 100.0% 100.0% the combined entity will differ Gross Profit 5’
Slide 108: Contact
CONTACT DR. KRISTIN KÖHLER NATALYA DOBROHORSKA AGUSTINA RINCÓN GLOBAL HEAD INVESTOR RELATIONS GLOBAL INVESTOR RELATIONS GLOBAL INVESTOR RELATIONS MANAGER ANALYST + 41 61 266 44 22 + 41 61 266 46 21 + 31 40 235 31 53 + 41 79 563 18 09 kristin.koehler@Dufry.com natalya.dobrohorska@Dufry.com agustina.r
Slide 109: Legal Disclaimer
Legal Disclaimer • Information in this presentation may involve guidance, expectations, beliefs, plans, intentions or strategies regarding the future. These forward-looking statements involve risks and uncertainties. All forward-looking statements included in this release are based on information av